MILWAUKEE COUNTY

Milwaukee Mayor Tom Barrett vows to veto any 'raids into pension reserve'

Milwaukee Journal Sentinel

Milwaukee Mayor Tom Barrett is vowing to veto any effort to reduce the city's pension payment in next year's budget — even if it would mean saving police and firefighter jobs.

"I'm not going to allow deeper raids into the pension reserve," Barrett said in an interview with the Journal Sentinel. "Because I think those types of actions just create more problems in the future."

Mayor Tom Barrett said "no city budget has presented more challenges or more frustration than this one" as he presented his proposed 2018 budget to the Common Council.

Barrett's comments come in the wake of a new Public Policy Forum report on the city's 2018 budget plan, which detailed the financial stresses facing Milwaukee.

"The primary culprit is a spike in the employer pension contribution, which increases from $61 million to $83 million," the report said.

That contribution amount covers a five-year period.

The forum also noted Barrett's "refusal to shield public safety represents a change in thinking."

"Overall, this is a watershed budget for the city," read the report, which is set to be released Monday.

The city would lose 33 police officer positions and 75 firefighter jobs in Barrett's proposal. The plan also includes a 3.7% property tax levy increase.

Under the budget, six Milwaukee fire stations out of 36 would be closed. The stations targeted for closure are located at 100 W. Virginia St.; 1313 W. Reservoir Ave.; 1693 N. Franklin Place; 300 S. 84th St.; 424 N. 30th St.; and 2400 S. 8th St.

Barrett called the current proposal his "Plan C," noting that he had previously urged Republican Gov. Scott Walker and the GOP-controlled state Legislature to increase shared revenue payments.

Calling it the "Milwaukee Dividend," the mayor repeatedly pointed out the city gets back only about 66% of what it sends to Madison.

The mayor then pushed for a half-cent local tax. Saying the tax could raise some $35 million per year for the city's police and fire departments, Barrett called on Walker and lawmakers to give the city the authority put the proposal before voters as a referendum on the April ballot.

"That obviously didn't happen," he said.

Dennis Yaccarino, the city's budget director, said raiding the pension reserve fund would raise concerns among current and retired city workers.

"We want to assure the retirees that we'll be well-funded and we'll be able to support them in their retirement," he said.

The city's pension system is 96% funded, Yaccarino said. Though not perfect, that funding level is better than many public pension funds — for instance the Pew Charitable Trusts have estimated that nationally state pensions are only about 72% funded.

Bond rating agencies can also lower a city's bond rating, which then increases interest rates and the city's cost to borrow money, Yaccarino said.

Milwaukee currently has an AA rating.

"I've seen way too many communities who have not funded their pension liabilities, and ended up in a much worse place," Barrett said. "Having said that, we clearly have to look at the pension programs, because they're not sustainable going forward."

Asked whether the city was considering pension changes for new hires or existing employees, Barrett said, "I think we're open to all of it."

Barrett again said most of the increase is attributable to police and fire pension costs, but added that Milwaukee is limited when it comes to making changes for those groups.

Almost all other public workers in Wisconsin had their bargaining authority stripped under Walker's 2011 measure, known as Act 10, and then had their members' take-home pay reduced by roughly 10% because of cuts to health care and pension benefits.

"State law really dictates our ability to make changes as it pertains to police and fire," Barrett said.

Jason Stein of the Journal Sentinel staff contributed to this report.